Iran Toughens Talk on U.S. Jet Deal

Tehran officials say Boeing accord is now more difficult to undo; threaten clawbacks if Trump administration scuttles it

By ARESU EQBALI in Tehran and

Iranian officials publicly hardened their resolve to proceed with a multibillion-dollar deal to buy dozens of Boeing Co. jets, threatening to claw back any lost money if the deal is scuttled after the inauguration of President-elect Donald Trump.
The officials touted the timing of the agreement to buy 80 aircraft with a $16.6 billion list price from Boeing—ahead of the start of Mr. Trump’s administration—as possibly making it more difficult to thwart the agreement.

“Both they [Boeing] and we were willing to reach the conclusion sooner, and fortunately it took place before the new government [in the U.S. takes office],” Farhad Parvaresh, the chief executive of state-owned carrier Iran Air, said Sunday. “Both sides are committed, and there are scenarios in the contracts for violation of commitments or in case of force majeure to deal with those cases.”
The Trump transition team didn’t respond to a request for comment.

Boeing also had reason to speed the deal along. The plane maker was eager to close before year-end so it could book the order in its closely watched annual tally.

Boeing—which had tangled with Mr. Trump earlier this month about the cost of its plans to build the next version of the Air Force One presidential jet—has trumpeted the deal as one that would help keep its U.S. workforce building aircraft for export.

The timing of the jet deal risked making Boeing a target of the president-elect a second time. But despite Mr. Trump’s outspoken opposition on the campaign trail to the international deal that lifted sanctions on Iran in exchange for curbs on its nuclear program, he hasn’t weighed in significantly since his Nov. 8 election.

Iranian officials, providing fresh detail about the deal on Sunday, appeared eager to bolster the bona fides of their contract with Boeing. They said they were confident of winning financing for the purchase.

The agreement represents one of Iran’s biggest post-sanctions economic spoils. For Boeing, it isn’t a blockbuster deal, but comes as the plane maker hits a bumpy patch for orders.

A Boeing spokesman on Sunday declined to discuss the deal.

The plane maker has yet to formally book the orders, which it said are subject to “contingencies” linked to U.S. and Iranian government approvals.

Airbus Group SE, the world’s No. 2 jet maker behind Boeing, also is expected to complete its own deal to sell planes to Iran before the end of the year.
Iranian Deputy Transport Minister Asghar Fakhrieh-Kashan said that if sanctions are re-imposed invalidating the contracts with Airbus and Boeing “we will take back all the prepayments, with interest.”

Airlines typically make regular installment payments to the two big plane makers as they build the aircraft, though the bulk of the money changes hands on delivery.

Still, the so-called pre-delivery payments are a key source of cash flow for both companies. Mr. Fakhrieh-Kashan said Iran would make an initial payment of about $226 million for the first 15 Boeing planes, but didn’t say when.

No money has yet changed hands. Still, the tough talk from Iranian officials, who announced the Boeing deal with fanfare in Tehran last week, underscored new questions swirling around the Boeing transaction—and over a handful of other commercial agreements between Iran and western companies—after Mr. Trump’s election.

Since then, a pall has fallen over the handful of deals that big, Western firms have signed with Iranian counterparts. In addition to criticizing the agreement that lifted Iran sanctions in January, Mr. Trump has elevated critics with closer ties to Iran to key national-security positions in his future administration.

Separately, the U.S. Congress recently passed legislation that would extend Iranian economic sanctions not related to the nuclear deal. In response, Iranian President Hassan Rouhani said this week that Tehran would move forward with developing a nuclear-propulsion system for ships. The White House at the time said the announcement didn’t breach the Islamic Republic’s nuclear deal reached last year with the U.S. and five other powers.

Iran Air is aiming to buy about 200 jets from Boeing and Airbus to refresh its aging fleet amid years of economic sanctions over its nuclear program.

Financing the Boeing planes also remains a key issue, no matter what Mr. Trump decides. Mr. Fakhrieh-Kashan said Sunday Iran’s sovereign-wealth fund would help pay for the planes. Iran Air would try to raise about $120 million through Islamic bonds and $500 million will come from overseas, he said. Boeing will provide financing for six of the planes, he added.

U.S. lawmakers opposed to closer ties with Iran have tried to block the deal by barring U.S. banks from financing the accord, though overseas lenders provide the bulk of funding for Boeing customers.

Mr. Parvaresh said Airbus would deliver seven or eight planes next year. Boeing deliveries wouldn’t start until April 2018. Airbus declined to comment before a contract is completed.

Iran Air said it has also scaled back the size of its plane purchase from Airbus, the Toulouse, France-based European company. It has dropped a plan to acquire 12 of the flagship A380 superjumbos. The value of the Airbus deal, once put at around $25 billion at list price, may not exceed $10 billion now, the Iran Air boss said.

Boeing has said its order would support almost 100,000 U.S. aerospace industry jobs. The direct impact would be much smaller, as the Iranian deal would represent only about 2% of the company’s backlog of more than 5,600 jetliners.